Reality has hit the real estate sector very hard. Realty sales in May dipped by 50% compared to April. The sales are expected to remain low for coming few days.
By Varun Singh
The real estate sector has finally tasted reality. Month of May 2021 witnessed almost a 50% dip in the sales compared to April 2021.
In April 2021, a total of 10,135 sales were registered in Mumbai. In May the registration figure dipped to 5,360 sales.
Of the sales registered in May, many in reality are those which are between January to March 2021.
The government of Maharashtra had allowed those sales of which stamp duty was paid up to March 2021 an extension of four months to register.
Even in the month of April, major sales registered were from the December 2020 to March 2021 period.
While COVID’s second wave has already impacted the real estate industry as sentiments are down, the reality in future for real estate doesn’t look very good either.
The government already has taken away the biggest draw of stamp duty cut, which has also acted as a dampener.
In the words of Deepak Goradia, President, CREDAI MCHI, “Essentially there two factors behind the decrease in property registrations. Firstly there is no additional financial incentive given that the stamp duty has been brought back to its original rate of 5%. Secondly the ongoing devastating second wave of COVID-19.”
According to Goradia, due to the second wave homebuyers have again become a little wary on long term investment and are currently more interested in saving their money for risk mitigation.”
The second wave of COVID has impacted almost every sector. For real estate the prediction by industry experts is that in reality sales will go further down.
Anand Gupta, Chairperson, Housing and RERA committee, Builders Association of India, says, “Sales figure in the month of May has come down drastically, and same may go down in June and July mainly because of sudden lockdown, stoppage of economic activities.”
Gupta also reiterates that the sentiments of homebuyers has gone against purchase of capital goods like property and hence real estate is suffering on account of bad sentiments.
Both Gupta and Goradia suggest that stamp duty concession be reinstated.
Garodia said, “Looking at record breaking registrations up till March 2021, we hope the government of Maharashtra takes definitive measures to reduce the stamp duty charge thereby galvanizing the housing demand again.”
Gupta says along with this concession withdrawal of lockdown on all economic activities can only improve sale transactions.